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12 July 2016
OVERNIGHT MARKETS AND NEWS
Sep E-mini S&Ps (ESU16 +0.46%) are up +0.52% at a fresh
record high and European stocks are up +1.79% at a 2-week high. U.S. stocks
received a boost from Alcoa which is up over 4% in pre-market trading after it
started off Q2 earnings reporting season by reporting higher than expected Q2
earnings. European stocks found support with a rally in automakers, led by an
over 4% jump in Daimler AG after it reported a 5.6% increase in adjusted
earnings. Also, Home Secretary May is prepared to take over as the UK's next
prime minister, which removes some political uncertainty in Britain. Asian
stocks settled higher: Japan +2.49%, Hong Kong +1.65%, China +1.82%, Taiwan
+0.63%, Australia +0.30%, Singapore +0.89%, South Korea +0.06%, India +0.66%.
China's Shanghai Composite climbed to a 2-1/2 month high on the heels of the
rally in the S&P 500 to a record high. Also, China International Capital
Corp and CIMB Securities Ltd. said that China's pension funds, which have about
2 trillion yuan ($299 billion) available for investment, may start to deploy
some of their holdings in securities including equities in the second half of
this year. Japan's Nikkei Stock Index rallied to a 2-week high as the yen fell
to a 2-week low against the dollar, which boosted exporter stocks.The Total
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The dollar index (DXY00 -0.22%) is down -0.37%. EUR/USD (^EURUSD)
is up +0.28%. USD/JPY (^USDJPY) is up +0.89% at a 2-week high
after Japanese Prime Minister Abe said he wants to "accelerate"
Japan's exit from deflation, which suggests he favors additional yen-negative
stimulus measures.
Sep T-note prices (ZNU16 -0.25%) are down -10.5 ticks.
Speaking in Sydney,
Cleveland Fed President Mester said the "the timing of the next Fed rate
hike is going to depend on how the economy evolves." She added that she's
"comfortable that we're not behind the curve, but that she thinks a
gradual upward tilt for interest rates is appropriate for the U.S.
economy."
Key U.S. news today
includes: (1) Fed Governor Danial Tarullo delivers opening remarks at a
conference on shadow banking, (2) St. Louis Fed President James Bullard (voter)
delivers a presentation at a breakfast meeting of the NABE, (3) May wholesale
inventories (expected +0.2% m/m, Apr +0.6% m/m) and May wholesale trade sales
(expected +0.5% m/m, Apr +1.0% m/m), (4) May JOLTS job openings (expected -288,000 to 5.500 million, Apr
+118,000 to 5.788 million), (5) Treasury's auction of $20 billion of 10-year
T-notes, (6) Minneapolis Fed President Neel Kashkari (non-voter) holds a town
hall forum at Northern Michigan University on the state of the economy and the role
of the Federal Reserve, and (7) USDA July WASDE crop production.
Russell 1000 companies
reporting earnings today: Fastenal (consensus $0.48), Commerce Bancshares
(0.68).
The Total Investment & Insurance Solutions
U.S. IPO's scheduled to
price today: none.
Equity conferences this
week include: none. The Total Investment & Insurance Solutions
Pinnacle Foods (PF -1.83%) was upgraded to a 'Buy' at
Goldman Sachs.
Alcoa (AA +3.26%) rallied +4% in pre-market
trading after reporting Q2 adjusted EPS of 15 cents, which was better than the
consensus of 9 cents. Q2 revenue of $5.30 billion was close to the market
consensus.
Seagate Technology (STX +0.33%) rallied 13% in pre-market
trading after its preliminary Q4 revenue beat expectations and the company
announced more cost-cutting by cutting 14% of jobs.
Oracle (ORCL -0.22%) was upgraded to 'Outperform'
from 'Market Perform' at BMO Capital Markets.
Astec Industries (ASTE +1.36%) was downgraded to 'Hold' from
'Buy' at BB&T Capital Markets. The Total Investment & Insurance Solutions
Swift Transportation (SWFT +0.96%) and Marten Transport Ltd (MRTN +0.09%) were both downgraded to
'Sector Weight' from 'Oveweight' at Keyblanc Capital Markets.
Fastenal (FAST +0.29%) reported Q2 EPS of 45 cents,
below consensus of 48 cents. The Total Investment & Insurance Solutions
RR Donnelley (RRD +2.33%) rallied 5% in after-hours
trading on a report by Bloomberg that Xerox (XRX -0.42%) is in early-stage talks to
acquire Donnelley.
Imperva (IMPV +7.55%) fell -12% in
after-hours trading after reporting disappointing adjusted EPS and revenue
figures.
Tesla (TSLA +3.69%) fell -1% in
after-hours trading on continued concern about the WSJ report that the SEC is
considering whether Tesla failed to report a recent crash as a material event. The Total
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Sep E-mini S&Ps (ESU16 +0.46%) this morning are up +11.00
points (+0.52%) at a fresh record high. Monday's closes: S&P 500 +0.34%,
Dow Jones +0.44%, Nasdaq +0.64%. The S&P 500 on Monday rallied to a new
record high and closed moderately higher on support from the +4% rally in the
Nikkei index after Japanese PM Abe's LDP party in Sunday's elections gained a
supermajority in the upper house of parliament, ensuring a new fiscal stimulus
program totaling as much as $200 billion. U.S. stocks also rallied on reduced
UK political uncertainty and indications that Brexit will move more quickly
after Theresa May's opponent in the PM race dropped out, allowing Ms. May to
become PM by Wednesday. The Total Investment & Insurance Solutions
Sep 10-year T-note
prices (ZNU16 -0.25%) this morning are down -10.5 ticks. Monday's closes: TYU6 -20.5, FVU6 -11.75. Sep 10-year T-notes on Monday closed
sharply lower on the prospects for a large Japanese fiscal stimulus program and
on reduced Brexit uncertainty as Theresa May will become Prime Minister by
Wednesday, much sooner than expectations of September. T-notes were also
undercut by reduced safe-haven demand with the rally in the S&P 500 index
to a new record high and by Kansas City Fed President Esther George's (voter)
resumption of her campaign for higher interest rates following last Friday's
strong payroll report.
The dollar index (DXY00 -0.22%) this morning is down -0.360 (-0.37%), while EUR/USD (^EURUSD)
is up +0.0031 (+0.28%) and USD/JPY (^USDJPY)
is up +0.92 (+0.89%) at a 2-week high. Monday's closes: Dollar Index +0.276
(+0.29%), EUR/USD +0.0008 (+0.07%), USD/JPY +2.25 (+2.24%). The dollar index on
Monday edged to a new 3-month high and closed mildly higher on weakness in the
yen caused by reduced safe-haven demand due to the rally in the S&P 500
index to a new record high.
The yen also saw weakness on expectations for
further BOJ easing in conjunction with a new Japanese fiscal stimulus program.
The dollar also continued to receive support from last Friday's strong U.S.
payroll report.
Aug WTI crude oil (CLQ16 +2.50%) prices this morning are up
+$1.32 a barrel (+2.95%) and Aug gasoline prices (RBQ16 +2.48%) are up +0.0405 (+2.93%).
Monday's closes: CLQ6 -0.65 (-1.43%), RBQ6 +0.0127 (+0.93%). Aug
crude and gasoline on Monday closed mixed. Crude oil prices were undercut by
last Friday's news from Baker Hughes that active U.S. oil rigs rose by +10 rigs
to 351 in the week ended July 8, adding to the previous week's +11 rig
increase. Crude oil prices received some underlying support from expectations
for a -3.5 million bbl decline in Wednesday's weekly
EIA U.S. crude oil inventories report. Gasoline rallied on some short-covering
after the recent sell-off.
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